You may have heard or read advice that suggests you should wait to buy a home because prices are likely to go even lower than they are now.
That may or may not be true. But even supposing prices do decline further, will you really be ahead by delaying your purchase? There are exceptional values available right now in many markets on homes and investment properties. Combine these great values with the low monthly payments provided by extremely low interest rates, and it becomes clear that there's no real advantage to waiting.
Let's explore the issue:
No one knows what's going to happen with prices - or when. It's possible these may be the lowest prices ever, and the still-low interest rates will keep your monthly payments affordable.
Let's say prices go down in the next year. How long do you plan to be in the home you buy now? Three years? Five years? Ten years or more? Unless you plan to sell next year, it's irrelevant whether prices go up or down in the next 12 months.
The most important question to ask yourself is this: Do you think prices for homes in your area will go up or down during the time you plan to own the home? History suggests that in most areas, prices of homes tend to increase over time.
What if prices go down, but interest rates go up? Even if homes are priced lower, your monthly payment may be higher for the same home, or homes in the same price range.
If you have a home to sell before buying, everything is relative. Yes, it's possible the price of the home you want to purchase may be less next year - but if it is, your home value will be lower also. This means you will have less equity to use as a down payment, and thus a higher loan amount, when purchasing your next home. This could equate to a higher monthly mortgage payment.
The reality is that, in many markets, it’s difficult to beat the combination available to buyers now. You can find exceptional home values (purchase a lot of home for the money), with low monthly payments, if you buy right now.